Update: 10 a.m., July 14, 2021
Welbilt has accepted Ali Group’s all cash offer and the deal between the two companies will move forward. More information is available here.
Welbilt may become an Ali Group company after all.
That’s due to the fact that on July 13, 2021, Middleby announced that it will not increase its offer to acquire Welbilt. This comes roughly one week after Ali Group upped its all-cash offer to acquire Welbilt to $24 per share, giving the deal a $4.8 billion price tag. Middleby had a five-day period to match Ali Group’s latest offer and the Elgin, Ill.-based manufacturer expects its merger agreement to expire at the close of business today. If that happens, the deal between Ali Group and Welbilt still must receive the appropriate approvals, etc.
In accordance with the original merger deal, Middleby will receive $110 million from Welbilt to terminate the deal. All the way to the end, Middleby leadership stood by its offer.
“We believe that the previously agreed terms of the merger between Middleby and Welbilt offered significant long-term strategic value to the Welbilt shareholders through the ability to participate in substantial upside opportunity from Middleby’s continued growth while remaining attractive to our existing Middleby shareholders,” said Timothy FitzGerald, CEO of Middleby. “As we considered our options over the course of the match period, we concluded to deploy our substantial financial resources wisely. We are excited about the momentum of our business and future prospects of our three industry-leading foodservice platforms. As a seasoned acquirer, we remain disciplined and committed to ensuring the best outcome for our Middleby shareholders.”
Middleby’s announcement caps a flurry of activity around the acquisition of Welbilt. On April 21, Middleby made an all-stock offer to acquire Welbilt valued at $4.3 billion. Then on May 28, Ali Group made an offer to acquire Welbilt for $23 per share in cash. Later that same day, Middleby issued a statement reiterating the company’s decision to acquire Welbilt and effectively standing by its offer. On July 5, Ali Group increased its offer to $24 per share. On July 6 Middleby released its second-quarter earnings report. In doing so, Middleby reiterated its offer to acquire Welbilt represented significant value for Welbilt shareholders for a variety of reasons. Also on July 6, the Welbilt board of directors deemed Ali Group’s second offer “a company superior proposal.”
In making its July 5 offer, Ali Group said the company has obtained fully underwritten, binding commitment letters for debt financing from Goldman Sachs International and Mediobanca. The latest Ali Group proposal also provides a “hell or high water” provision, which requires the Italian company to take all actions necessary, including divestitures, to obtain all requisite antitrust approvals without undue delay. When announcing its July 5 offer, Ali Group added, “Further, given the minimal product overlap between our two companies and the fact that our proposed transaction does not require an Ali Group stockholder vote, we believe our proposal offers far greater certainty of closing than the Middleby transaction.”
Assuming Ali Group does acquire Welbilt, the deal will represent the latest in a long line of transitional moments for the collection of foodservice equipment brands that combine to form Welbilt. In April of 2008, Manitowoc, which then had its cranes and ice machine business, announced the acquisition of the Enodis Companies, which included such brands as Garland, Cleveland, Lincoln, Merrychef, Frymaster, Delfield, Kolpak, Scotsman and Ice-O-Matic. To gain governmental approval for the deal, Manitowoc was required to sell Ice-O-Matic and Scotsman, which it did, to investment firm Warburg Pincus in May of 2009. Warburg Pincus eventually sold Ice-O-Matic and Scotsman to their current owners, Ali Group, in November 2012.
In March 2016, The Manitowoc Company separated its foodservice business from its crane business, creating an independent, publicly-traded company that goes to market as Manitowoc Foodservice. And in March 2017 Manitowoc Foodservice was renamed Welbilt.
Growing through acquisitions is nothing new for Middleby. In fact, it’s something the company has been doing for years, first under the leadership of previous CEO Selim Bassoul and now with FitzGerald at the helm. Undoubtedly, growth through acquisition will remain a key page in the Middleby playbook moving forward. Since 2018, the multiline foodservice equipment manufacturer has completed more than 20 acquisitions. Middleby’s more recent deals include the December 2020 acquisition of Zhuhai Guangdong China-based United Foodservice Equipment Group and the June 2019 acquisition of Ss Brewtech, a manufacturer of crafting brewing and beverage equipment. And in February 2019, Middleby acquired Standex Cooking Solutions Group.
“The additional cash infusion Middleby stands to receive upon termination will put us in an even better position to execute on our existing M&A growth strategy, as we continue to build upon on our long-standing track record of value-creating deals,” adds FitzGerald. ““Looking ahead, we remain highly confident in our ability to drive continued growth and profitability and believe we are uniquely positioned to deliver superior value creation for our shareholders”
Ali Group is also no stranger to adding to its company via acquisition. In April, Ali Group acquired Kold Draft, a maker of ice machines, from the Legacy Companies.